If you wanted to buy a home in Boulder County in July 2006, you could have had your choice of 2,420 single-family detached homes that were on the market—an all-time high. At the end of 2013, you had just 507 homes to choose from. That dramatic drop in inventory is a big part of the story you’ll be hearing in 2014 whether you’re a buyer or seller.
Over the past 12 months (chart 1), the inventory of residential homes for sale has dropped by more than 18 percent while sales have increased by nearly 7 percent in that time. It’s why competition for good homes is intense: more buyers are chasing fewer homes, resulting in increased prices, competitive bidding and a tendency of some buyers to wave contingencies such as home inspections or cosmetic repairs.
However, while some homes generate a buying frenzy, others can linger on the market, helping keep home prices in check and bringing a level of overall stability to the local housing market. Consider the historical period of 2001 to 2013 (chart 2). In Boulder County, median home prices grew at a steady pace, dropping a bit during the Great Recession of 2007 through 2009. But the shift in home values countywide were nowhere near the wild fluctuations seen nationwide.
Looking ahead, the story in Boulder County is low inventory. There are a few reasons that. The September floods took some homes off the market and added more renters to the mix. Some homeowners are still upside-down and waiting for prices to recover. Builders are not yet ramped up to pre-Recession levels. Potential sellers have nowhere to move and are sitting tight. And, of course, rising mortgage interest rates are keeping some buyers on the sidelines. But overall, we expect Boulder County to do in the future what it has done so well in the past: outperform much of the country with steadily advancing home values.